Capitol Hill Healthcare Update - July 10, 2017.

The Senate reconvenes today following the Fourth of July recess, but senators are at least a week away - and perhaps even longer - from voting on legislation to replace the Affordable Care Act (ACA).

Familiar divisions continue to frustrate Republicans: how to deal with states that expanded their Medicaid programs (20 GOP senators represent states that did) and how to bring down costs for individual health plans while still covering pre-existing conditions. Majority Leader Mitch McConnell and other GOP leaders personally called rank-and-file senators during the recess, but it doesn't appear Republicans are closer to resolving thorny policy differences.

Rather than allowing lawmakers to return to the Capitol with renewed optimism for overturning the ACA, the holiday recess appeared to provoke only more intra-party division. Several Republicans announced last week that they opposed the draft legislation McConnell released in June, and at least three other senators refused to publicly back the bill or even its framework. And Sen. John McCain (R-Ariz.) pronounced the current healthcare bill "dead."

All that leaves McConnell in virtually the same place he was in June: facing a grim needle-threading exercise to bring enough moderates and conservatives together to muster 50 votes, allowing Vice President Mike Pence to cast the tiebreaking vote. Republicans hold 52 seats, and McConnell's home-state colleague, Sen. Rand Paul (R-Ky.), is considered likely to oppose any legislation - leaving McConnell with a wafer-thin margin for error.

Conservatives are talking up a proposal by Sen. Ted Cruz (R-Texas) that would allow insurers to offer plans that both meet and don't meet the ACA coverage requirements, including on pre-existing conditions. The idea is that plans free from ACA regulations and coverage mandates would be significantly less expensive, meeting conservatives' goal of driving down costs for insurance coverage.

But Cruz's plan lacks deep support among Senate Republicans, the majority of whom say it would effectively undermine the insurance marketplace as younger, healthier people buy the non-compliant plans, causing costs to mushroom for the ACA plans needed by older and sicker consumers.

During the recess, President Trump tweeted that if Congress couldn't pass its ACA overhaul, lawmakers should just repeal the ACA now and draft replacement language later. Not for the first time, the president's...